Interest Rate in Brazil
Brazil - Interest Rate
Central Bank holds SELIC rate at 6.50%
At its 31 July–1 August meeting, the Central Bank of Brazil’s Monetary Policy Committee (Comité de Politica Monetaria, COPOM) unanimously decided to keep the benchmark SELIC interest rate at its record low of 6.50%. The decision matched market analysts’ expectations. The Central Bank paused the long and aggressive easing cycle that began at the end of 2016 at its May meeting.
The Bank’s accompanying statement echoed the previous meeting’s and stressed that risks to the inflation outlook remain balanced in both directions, justifying the decision to hold the SELIC rate unchanged. On the one hand, low inflation expectations and economic slack could prompt inflation to surprise on the downside going forward; on the other hand, a lack of economic reforms or a further deterioration in the outlook for emerging market economies could drive price pressures up. While inflation did spike in June this was due to the truckers’ strike, and the Bank stated that it expects the high inflation to be temporary and that underlying price pressures are still moderate. Moreover, the weak state of Brazil’s economy justifies an accommodative monetary policy stance.
The Bank revised up its inflation expectation for 2019 but left this year’s unchanged, seeing year-end inflation of around 4.2%. Next year, the Bank sees inflation ending 2019 at 3.8% (previously: 3.7%), assuming the SELIC rate concludes the year at 8.00% and the real at 3.70 per USD. However, overall, the statement struck a broadly neutral tone, stating that future decisions will depend on incoming data, inflation expectations and the balance of risks. That said, the weakening of the real is likely to stoke upward pressures, and the currency is expected to remain under pressure going forward due to election-related uncertainty in Brazil and a tightening cycle by the U.S. Federal Reserve.
Met the why particular Consensus Forecast participants see the SELIC rate closing 2018 at 6.72% and 2019 at 8.02%.
Brazil - Interest Rate Data
|Policy Interest Rate (%)||11.00||11.75||14.25||13.75||7.00|
5 years of economic forecasts for more than 30 economic indicators.
Brazil Interest Rate Chart
Source: Central Bank of Brazil.
|Bond Yield||11.54||-0.82 %||Aug 15|
|Exchange Rate||3.91||-0.13 %||Aug 15|
|Stock Market||77,078||-0.11 %||Aug 15|
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August 13, 2018
Retail sales (excluding cars and construction) fell 0.3% from the previous month in seasonally-adjusted terms in June, following May’s revised 1.2% contraction (previously reported: -0.6% month-on-month). Drops in sales of fuels and lubricants; and hypermarkets, supermarkets, food products, beverages and tobacco drove the month-on-month decline. On an annual basis, retail sales increased 1.5 in June, a sharp deterioration from May’s 2.7% rise.
August 8, 2018
Consumer prices increased 0.33% in July over the previous month, significantly below June’s 1.26% rise.
August 3, 2018
Business sentiment in Brazil weakened in July, with the Getulio Vargas Foundation’s (FGV, Fundaçao Getúlio Vargas) business confidence index falling to 99.6 points from 110.1 points in June.
August 2, 2018
Industrial production returned to growth in June, recording the largest expansion in over a decade.
August 1, 2018
Conditions in Brazil’s manufacturing sector improved in July, recovering after the truckers strike dented economic momentum in June.